U.S. toy prices surge as tariffs and Iran war lift holiday costs

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U.S. toy prices surge on tariffs

Highlights

Toys in the U.S. rose 6.6% year-on-year and 4.2% from August due to tariffs and rising oil, commodity, and shipping costs.
U.S. tariffs on Chinese goods, which peaked at 145% and eased to 30% in May 2025, continue to influence current toy shelf prices, despite a late-September tariff reduction agreement covering $30 billion in goods.
Mattel and Hasbro report margin pressure from both lingering tariff effects and ongoing inflationary impacts from the Middle East conflict, with consumer costs remaining politicized ahead of the holidays.

Toy inflation accelerates before holidays

As reported by Reuters, the latest U.S. consumer inflation data show toy prices rising 6.6% over the last year and 4.2% from August on a seasonally adjusted basis. Apparel and footwear prices also rise in September, but the jump in toys is steeper as consumers begin planning holiday purchases.

The toy sector remains especially exposed because most toys sold in the U.S. are made in China and rely heavily on fossil-fuel-based plastics. That leaves the category vulnerable both to Trump administration tariffs and to higher oil, commodity and shipping costs linked to the war in the Middle East.

David Silverman, senior director at Fitch Ratings, says those two pressures appear to be showing up in pricing. He says the impact from the Iran conflict on commodity and shipping costs will likely persist for the next several quarters.

Tariff fallout and industry margin pressure

Soon after returning to the White House, President Donald Trump imposed broad levies on imports from China and in April 2025 acknowledged those policies might raise consumer prices. U.S. tariffs on Chinese goods later ease from an initial 145% rate to 30% in May 2025, and Washington and Beijing reach a late-September agreement to reduce tariffs on $30 billion each of imported and exported goods.

Even so, current shelf prices still reflect the earlier, higher tariff regime because many toys now being sold were priced last year, according to Jay Foreman, chief executive of Florida-based Basic Fun. He says lower tariffs should gradually help reduce toy prices if wider global pressures, including wars that raise fuel and raw material costs, also ease.

The pricing squeeze is also weighing on major manufacturers. Mattel finance chief Paul Ruh says the company is seeing moderate inflationary pressure tied to events in the Middle East after tariff-related costs already squeezed margins, while Hasbro finance chief Gina Goetter says the company has absorbed higher input costs.

The consumer backdrop remains politically sensitive as costs stay elevated. A Reuters/Ipsos poll through October 5 shows 21% of voters approve of Trump's handling of cost-of-living issues, while 67% disapprove.

Our earlier coverage of the WTO’s warning on the Middle East war and geopolitics explained how conflict-driven disruptions are forcing companies to redesign supply chains and shipping routes in ways that could outlast the fighting. The WTO projected a sharp contraction in Middle East trade and noted that tariffs and repeated shocks are accelerating a shift toward costlier but more resilient logistics networks. That backdrop helps explain why higher shipping, fuel, and input costs can persist and show up in prices across consumer categories.

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